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Pro Post: How Offer Conditions Can Make You Lose a Bidding War

Offer conditions such as upon inspection or approved financing are important buyer safeguards - but can put home bidders at a disadvantage. Our friends at TheHousingBlock.com share what conditions you can - and shouldn't - negotiate on.
Money Doesn't Always Talk
After months of searching you believe you’ve found your dream home. You’re ready to put in an offer – the only problem is you’re not alone. There are at least two other buyers interested in the property. Despite your desire to avoid a bidding war, you decide to go for it! But not so fast! Before you put pen to paper, it’s important to give your offer some serious thought. Although you may think a seller will always accept the highest offer price that isn’t always the case.
Clean vs. Conditional Offers
There are two main types of offers: clean and conditional offers. A clean offer is as the name suggests – free from any conditions. Once the seller accepts your offer it’s a done deal. In a perfect world everyone would make a clean offer. However, most of the time buyers make what is called a conditional offer. These offers include at least one condition that must be satisfied before the deal is firm (completed). Common conditions for buyers are condition of home inspection and financing (although you can include a condition for almost anything).
Why Conditions Matter
Buying a home is most likely the single largest financial transaction of your lifetime, so it’s only natural buyers would want to protect their interests. Conditions do just that. To the untrained eye a home may look in pristine condition, but with the help of a certified home inspector you may discover a host of costly repairs you’re not willing to pay. If you include a condition of home inspection and you’re not happy with the inspection report, in most cases you can walk away from the home no strings attached (as long as the seller is willing to return your deposit).
Even if you’re pre-approved for a mortgage, there’s no guarantee your lender will approve your mortgage once your offer has been accepted. That’s why it’s a good idea to include a condition of financing. If your mortgage lender isn’t willing to approve your mortgage or if the appraisal is lower than the purchase price, your conditions provide you with an escape clause.
How Conditions Can Cost You Your Dream Home
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